The role of the CMEA's foreign trade monopolies in mineral markets

Abstract

The business rationality of the CMEA mineral traders is bound by several characteristics of mineral production under central planning and by the mechanics of foreign trade monopoly. These characteristics include aspects such as: priority of national economic goals over trading strategies of the Foreign Trade Organisations (FTOs) in Eastern Europe; balance-of-payment problems; the organizational complexities and the weakness of the incentive mechanism, as well as the lack of an appropriate performance criterion. It is suggested that the 30 mineral trading FTOs in the CMEA tend to perform in a manner comparable to marketing departments of the Western mineral industries but are at a clear disadvantage when compared with ‘stand alone’ Western intermediaries making profits through risk taking and abhoring bureaucracy and rigidity in management.